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Closing Bell With Maria Bartiromo

News/Business. Maria Bartiromo. Analysis of the day's winners and losers in the stock market. New.

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01:00:00

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Us 13, Steve Cohen 6, Willis 5, U.s. 4, Robert Frank 4, United States 3, Bakers Union 3, America 3, Steve Liesman 3, Citi 3, Cohen 3, Walmart 3, Washington 3, Sandy 2, Schwab 2, Rick Santelli 2, Kate Kelly 2, Mario 2, Ameritrade 2, Steve 2,
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  CNBC    Closing Bell With Maria Bartiromo    News/Business. Maria Bartiromo. Analysis of the  
   day's winners and losers in the stock market. New.  

    November 21, 2012
    4:00 - 5:00pm EST  

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we certainly applaud their efforts this holiday season. have a wonderful thanksgiving. i'll see you on friday. here's maria now with the second hour of the "closing bell" and the ceo of hostess. and it is 4:00 on wall street. do you know where your money is? hi, everybody. welcome back to the "closing bell." i'm maria bartiromo on the floor of the new york stock exchange. the market higher after a cease fire was announced after israel and gaza. take a look at how we're settling the day on this market. up 48 points. volume on the light side, as you can see there. very light here as we approach the market closing tomorrow for thanksgiving and a short close on friday. nasdaq, s&p 500 also fractionally better on the session. more on the markets coming up. first, we have more breaking news as the bankruptcy judge green lights hostess brands to begin liquidation. the ceo of hostess brands joins me right now in a first-on cnbc interview. good to have you on the program. thanks for joining us.
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>> sure, maria. >> well, tell us, what happened first yesterday at final mediation talks? was a deal ever close? >> you know, the judge has a gag order. he'll have my head if i talk about what went on during the mediation, but i think that he wanted to make sure that he did everything in his power to try to find a deal, if there was one to be found. you know, i appreciate the fact that he went through that effort. i was hopeful, but i think realistically that was going to be a tough thing to pull off. >> how much of an implication it was the fact the union leader did not show up to those mediation talks? >> well, the leader of the bakers union sent his second in command to the meeting. i think that part of what we needed to sort of focus on is the hole that's been created by the strike and the financial damage from that strike and our inability to produce at some of our critical plants. really just created a brand new hole that was too large to fill.
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bankrupt companies don't have a lot of margin for error to begin with. if you take a shot like that, it's going to be hard to climb out of that. >> so what happens now? i guess talk to us about how you got here. >> well, for now we're going to focus on trying to find homes for the brands. we have had an enormous amount of interest in the brands, especially now that they're sort of unencumbered by union contracts, antiquated plants and pension plan liabilities. we've got buyers everywhere from strategics to financials, a number of in bounds. we haven't started the outbound process. what we're going to try to do from here is very quickly, because we're off the shelves now, so the value will go down the longer we're off the shelf in terms of what we'll get. very quickly try to find homes for as many brands as we can. >> let me ask you about finding a home. if hostess is sold as an entire company or even parts of the company sold, will a buyer take the company with the union
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intact, or are you talking about selling these brands nonunionized? >> well, you know, we historically tried to sell the company as a whole. that never worked because of the contracts, because of the multiemployer pension plan liabilities, because the plants are fairly antiquated. there hasn't been a sufficient investment in those plants over the last decade. that was an unsuccessful process. we also tried to find equity investors to fund a turn around. that was unsuccessful because of the potential pension liabilities. so at this stage, you know, we're going to sell to whoever is going to put the best deal on the table. that could be a strategic that has his own production or a strategic that needs a plant. we'd like to find homes for our employees to the extent we can get them rehired and in conjunction with those brand sales then i think that would be fantastic. but it really will depend on what category of buyer we have and what their needs are. >> if the union took the deal
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yesterday, would hostess have survived financially? >> i think part of the issue was certainly that the financial hole was too great and there is simply no further financing available, so i think that the judge understood that. >> what are you expecting to get for some of these brands in terms of the value? you say the longer the product is off the shelves, the value goes down. so what's the value in your head in terms of what this company is worth? >> you know, it's very hard to predict that because of how odd this set of circumstances is. you know, in our industry, a typical sale price would be a multiple of one time sales. our sales are around $2.4 billion or $2.3 billion. that would be for a going concern that's profitable. a, we were not profitable. b, we're obviously not a going concern. you have to discount that substantially. i still think you're talking about a big number. i think we had testimony today from our investment bankers that it's certainly conceivable we could get over $1 billion in
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proceeds. >> and who are the likely candidates to acquire which brands? >> you know, it's hard to say at this this point because again, most of the interest has been inbound because of the announcement we made on friday that we were going out of business. our formal process is really kicking off once we got the judge's order today. i do know on the inbounds that we have customers that are interested. we have competitors that are interested. and we have financial players that are interested. we have international interests as well as u.s. and domestic. >> i'm not sure if you heard the last interview, but we spoke with one of your union members from the bakers union. he basically said, look, you can't negotiate with terrorists, and they were stealing our pension. in retrospect, was there an area where you could have given to keep some of these union members happier? >> well, you know, it's interesting. i think, you know, i came on board in february after the bankruptcy filing to try to get
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the company out. and i would readily admit, i think there's a lot of bad history here and a lot of places to point the finger for blame. i don't spend a lot of time doing that because that's sort of like bayonetting the dead in the battlefield. if i could look back, i would say i think there were management mistakes. i think there were union mistakes. as a turnaround guy, i think it should have been done prefiling. these parties negotiated all last year and never got anywhere. i think in retrospect, you could always do different things and have a different outcome. >> what was the most costly sort of want on the union side that just couldn't happen from hostess' standpoint? it was the pension? was it salaries, what? >> no, you know, the biggest pension issues we had were with the multiemployer plans that the teamsters are in. it was largely an issue with them. we actually got a deal with them. it was not an easy deal to get to, but we negotiated and they approved these wage concessions.
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the problem we have with the bakers union is they didn't object to the hearing where we got the judge to allow us to impose the changes. they actively sought to vote down the changes. it's not as though they were asking for something, you know, in terms of a quantifiable amount. what they were saying is they weren't going to take the concessions. the difficulty with that is that it was an 8% wage cut, but it was across the board. total company. management, nonunion, and all the other unions that approved it. i couldn't see a way we could do a deal that treated them somehow differently. >> and when will you lay off people? >> today. we will drop down today from about 18,500 employees to about 3200 for the wind down nap will drastically drop about two months from now. >> all right. we'll leave it there. good to have you on the program. thanks for walking us through it. we'll be watching the story develop. >> thank you, maria. >> let's get back to the markets here. we have the dow up 48 points on the session today.
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tim holland is with me along with rick santelli. good to see you, guys. tim, let me get your take on what drives the market next week and into year end. >> well, you have the fiscal cliff. you have the political class. they have to work out some of these budget issues, but sort of beyond the near term, maria, i think they're two underpinnings that are supporting the market. they were in place preelection. hopefully you sort of get through some of these political negotiations. you get back to some of the better underlying fundamental news and some of this volatility starts to dissipate and we start to turn higher. >> rick, you agree with that in terms of the catalyst for this market? you think we get a deal done by year end? >> i don't. i don't. i don't agree with much of what's out there. i think we can get the framework for a grand bargain before the end of the year, but i think that's 50/50. and many analysts, economists, and politicos don't believe
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there's grand bargains in the cards at all. i do. i think there's so many issues with congress out that i think are going to come to the table to make both sides have a pretty good handle over the other. i think debt ceiling is a big deal. i think that mr. boehner has talked about health care taxation and issues there should be on the table. so i think that this is going to be a lot bumpier, a lot more ho gul -- moguls think. i think the rise above can be a strong ax yum even if this is pushed into 2013. >> what about that, tim? >> sure. i guess it depends on your time frame. we're long-term investors. we try and take advantage of periods of weakness or volatility to essentially buy the best with they're depressed.
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if you do that over the long haul, things tepid to work out. the oh thing i'd point out is if grow back to mid-september when the correction started, we really pulled back about 8% or 9%. we've bounced 3 or 4. it's felt worse than it's actually been. and again, you sort of come back to fundamental and whether or not you stay with the asset class depends on your time horizon. we're trying to take advantage of the weakness to the benefit of our clients. >> where do you want to be exposed to, then, going into year end? >> sure. we continue to believe that the u.s. economy is in pretty good shape. the consumer's in good shape. housing bottomed about 14, 15 months ago. companies like home depot, which recently exceeded expectations, raised long-term profitability goals, and portly, frank blake, who's orchestrated a great turnaround has noted that housing has finally gone from being a head wind to a tail wind. we like the asset management companies like waddell and reed.
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their flagship fund is in the eighth percentile year to date. industries and companies like retail, small banks, and home builders, we think are going to be good places to be as we go into the new year. >> all right. we will leave it there. rick santelli, final word from you on what drives fixed income and treasuries toward year end. same issues, i guess. >> well, i think next week, first of all, we have a gdp revision. second time around on third quarter. many are calling for a big upward revision from 2% to 2.8. if that actually happens, i think that would be a rather compelling reason outside of quiet holiday markets to see some sustained selling in treasuries. maybe not up to 2%, but a lot more than we've seen the last couple weeks. >> great point. typically a market mover in the gdp. thank you, guys. happy thanksgiving. up next, should walmart follow president reagan's lead in dealing with striking union
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workers? >> if they do not report for work within 48 hours, they have forfeited their jobs and will be terminated. end of statement. >> reagan following through by firing over 10,000 striking air traffic controllers. someone here says walmart workers who walk off the job on one of its busiest sales weekends ought to be fired on the spot. we'll discuss both sides of this touchy issue next. late evelater, will u.s. co open their wallets this weekend? steve liesman says absolutely. stick around for our retail therapy panel coming up. later on, with the fiscal cliff and debt looming larger, you'd think our nation's lawmakers would be working this thanksgiving. go figure. i'll talk to one of the fix the debt ceos about the biggest crisis facing our country. back in a moment. g kong. tdd#: 1-800-345-2550 after that, it's on to germany. tdd#: 1-800-345-2550 then tonight, i'm trading 9500 miles away in japan.
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welcome back. some walmart workers are preparing to walk off the job and protest the retail giant on black friday. the national labor relations board said it probably won't rule on the legality of these protests until after they occur. here is the latest. >> walmart is sure to be busy on black friday and not just with
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shoppers. the national labor relations board says it's unlikely to act on complaints filed by unions and the retail giant in time to head off nationwide protest on black friday. a statement from the office says in part, quote, the legal issues including questions about what constitutes picketing and whether the activity was aimed at gaining recognition for the union are complex. walmart claims the united food and commercial workers international union has backed job actions and protests in recent months aimed at disrupting wadisrupt ing walmart's business and unionizing employees. unions are showing solidarity, calling on their members to stand with walmart workers. walmart officials tell cnbc it was important to get their complaint on the record, even if it could not be resolved before black friday. what happens next is up to the nlrb general counsel. he operates indpept independente
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five-member board. there are legal challenges to two of the board's members over recess appointments made by president obama last january. as for black friday, 35 million shoppers showed up at walmart stores nationwide last year. the retail giant says it's not changing anything due to those planned protests on friday. maria. >> all right. thanks so much. so should the workers that choose to walk out be fired from their job ps diana roth says a resounding yes. richard says absolutely not. both join me now to hash it out. good to see you both. diana, you say these workers should be fired? >> if i walked off my job, i would get fired. i am not a lawyer. maybe it's yes, maybe it's no. the important thing to say is that joining a union would not be good for walmart employees. if you just look at food and commercial workers union pension plans, they are dramatically underfunded. the tristate pension plan is
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funded at about 65%. the northern california one at about 55%. these walmart employees would be f paying for the pensions of retired employees of other companies and it would be very difficult for them to fwget the benefits out. there's a reason walmart employees don't want to join unions and should remain nonunionized. >> richard, you disagree. you say this is a strike protected under unfair labor practices. >> that's not just bad advice, that's un-american. americans have the right to strike for certain purposes without being fired. that is something we all ought to worry about. more importantly, these are folks who work full-time and make about $15,500. what is good for walmart, what is good for the economy, what's good for job creation is having people paid enough to buy the products that they sell. henry ford, that great socialist, understood that if you underpaid retail workers,
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auto workers, people like that, the economy would collapse. what these workers are saying is that walmart is mistreating them. they have a right to say it. it frankly would be better for everybody if they get to paid a little bit more. >> but -- >> no one is forcing these employees to work at walmart. if they could get paid more elsewhere, they would leave and get paid more in other jobs. besides, with an unemployment rate near 8%, there are plenty of other people who want those jobs at walmart. also, everyone thinks that they're underpaid. you probably think you're underpaid. >> i guess you haven't been out in the streets trying to find a job that pays a living wage. the folks who are working at walmart are working 34 hours a week for $15,000. you can't live a life that way. you can't buy things. there was just a report done about what would it mean for the economy if our retail workers
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were paid a decent wage and unions help them do that. this anti-union attack may have ideological basis, but it's bad economics for the country and it's bad economics for the american people. >> but they're going to strike on one of the busiest days of the year. this is one of the most important days of the year in terms of sales for the company. they want to strike on that day. it's like a shakedown. >> it is exactly like a shakedown. when you look at what unions are doing to the united states, they just forced this hostess company to close. it's probably going to move elsewhere. you look at what they did to gm, ford, chrysler, those are the companies that needed bailouts because their labor costs were too high. >> to blame working people for the mismanagement of large companies has an audience and a constituency, but it's not the truth. there's plenty of blame to go
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around in all of these things, and labor has to take its share of it. what's going on with people who simply can't afford to live but are fully employed. these aren't the 47%. these are people who work their butts off and are simply not capable of living decent lives. america can do better. it would be good for the economy. >> walmart is paying these workers more than minimum wage, which is what they're required to do. if they joined a union, then their dues would go to the large amounts of political contributions and lobbying and political activity that the united food and commercial workers union was giving about $10 million last year. we have a disagreement. >> the adee lodideological atta unions you're entitled to. >> what about the dues being used for political contributions? >> those are check-offs. those are not the same thing.
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the legal arguments that are being made here today are so off the wall. >> they are not. what about the underfunded pensions? 55%, 65 in the red zone. >> you can talk about what it's like to raise a family on $15,500. those economics are bad for the united states. you must pay workers enough to buy the products they sell. when you justify impoverishing hard-working people, you will see, as the report points out, it has a negative effect on job creation, a negative effect on demand. supply side economics failed. it's time we try some demand side economics. >> if you're going to tell employers what they have to pay their workers, then employers are simply going to go elsewhere unless the workers increase their productivity. what we're seeing right now is a trend towards more part-time work because of the new health care law. we're seeing that machines are replacing workers. you go to cvs, you see these scanning machines.
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>> i'm not telling walmart what to pay its workers. i'm saying in america we have a process called collective bargaining which allows the management side and the unions to come together and decide that in a democratic fashion. >> and not to strike on the busiest day. you both make very important points. we so appreciate it. diana, thank you very much. richard, good to talk with you. we'll be back to this subject, of course. assuming you will join us once again. we'll see you soon. thanks very much. up next, assuming anarchy does not break out, shoppers are expected to put some extra zing in the economy this holiday season. our steve liesman breaks it down in our retail panel. later, what happens on wall street certainly does not stay on wall street. hedge fund whale steve cohen's link to an insider trading probe could ripple across the art market. our wealth editor robert frank with the story in the back half of the show. stick around. [ male announcer ] this december, remember -- ♪ you can stay in and like something...
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welcome back. ready, set, shop. consumers are set to kick off the holiday shopping condition tomorrow night. steve liesman is looking at just how much they're planning to spend. steve, over to you. >> thanks, maria. if you want to know if consumers are going to spend this christmas, you have to know if they have the means and if they're in the mood to spend. let's take in some key consumer metrics heading into the holiday season. first, we're going to look at home prices. in 2011 at this time before christmas, home prices were falling by 6%.
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now they're rising by almost 11%. let's take a look now at wages. they were up 3.5% in the year before last christmas. now they're up a little bit more. inflation, of course, takes off some of that. in fact, they are still negative, but less negative than a year ago. how about another key metric, which is consumer sentiment this is 20 points higher. we're going to have a big question about that in just a minute. first, let's look at the last one, which sun employment. remember this time last year? unemployment was at 9%. now it's down 1.1% to 7.9%. all of these suggest we're in a better place going into this christmas. how about debt levels? you can see over the course of the crisis, debt levels have come down, although we had a little bit up here. the debt service ratio, how much americans are paying to service their debt, is also down substantially. what are the key questions on consumers this is how much the fiscal cliff ends up hurting them and their psyche moving into the holiday season. are they secure in their job and secure about their income?
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finally, getting the right savings rate right and the right debt level. are they willing to take on more debt? key questions, maria, but also better economics heading into this christmas season. back to you. >> steve, thank you so much. as shoppers prepare to flood the malls, which retailers will be the winners and losers? let's bring in our guests. good to see you both. thank you so much. break it down for us. who will come out again and shop and spend money this weekend? >> you bet. don't ever forget that black friday is all about sheer entertainment for the consumer. she loves a great deal. the retailers are absolutely going to deliver this year. so you're going to see a very deal-oriented consumer this particular weekend and on friday. but we're very optimistic. >> courtney, what are you seeing? the earlier shopping hours, is that helping? >> a lot of analysts think it will. in years past, it is a different group of shoppers on thursday
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night. typical typically, you're going to see more men and more of the millennial shopper. they'd much rather shop late than get up early on friday morning. the friday morning shoppers, that's still going to be mostly women, mostly middle-aged women. sometimes families go out as an event. but it is expected to add to the sales. remember, it's not free for retailers to open. they have costs associated with being open longer hours too. they certainly think it's going to be worth it. >> what do you think? the earlier hours, opening on thanksgiving. is it worth it? >> we think it's worth it. to courtney's point, these retailers know their labor models very well. so a lot of them started to test this out last year with the midnight openings. they're coming back this year and saying not only is it midnight, it's going to be 9:00 the night before. they obviously think that it's worth their time and while. >> we're seeing a growing trend towards online shopping. how does the brick and mortar versus online fare this year, you think? >> we think that online will
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continue to outpace the rate of sale of brick and mortar because it's still very much in its infancy. it's 8, 9, 10% of total retail sales. that will continue to grow. we think the retailers that have really come on board to embrace .com as an overall strategy are going to be the real winners in the end. we say focus on nordstrom. >> any thoughts on online, how big it will be this holiday? >> maria, i think it's going to be really big. last year we had ten days, over $1 billion in sales over a 24-hour period. a lot of people think we could see 13, maybe even 14 of those days this year. i think a lot of folks that may have previously gone out on a black friday or even at some point during the weekend might look at those deals online. if it's right there, it's just as easy to click that button and buy it as opposed to get in the car and drive to the store. >> no doubt about it. thanks, ladies. really appreciate it. happy thanksgiving. see you soon. >> thank you. up next, what's the quickest road to turkey? we'll tell you what you need to
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know to get to your destinations with the least amount of pain coming up. >> up next -- >> we have an economic crisis. they're going home for thanksgiving. >> asking what our nation's leaders are doing to avoid the fiscal cliff. i'll speak with one of the fix the debt ceos on the other side of this break. stay with us. aughter really wants that pink castle thing. and you really don't want to pay more than you have to. only citi price rewind automatically searches for the lowest price. and if it finds one, you get refunded the difference. just use your citi card and register your purchase online. have a super sparkly day! ok. [ male announcer ] now all you need is a magic carriage. citi price rewind. buy now. save later.
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when we got married. i had three kids. and she became the full time mother of three. it was soccer, and ballet, and cheerleading, and baseball. those years were crazy. so, as we go into this next phase, you know, a big part of it for us is that there isn't anything on the schedule.
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welcome back. an extended thanksgiving break as washington is turning heads on wall street. just listen to mario this morning. >> if you have these guys in new york, mayor bloomberg, mayor booker, the governors, cuomo, christie, malloy, if they went on holiday while we had sandy, what would you do? we have an economic crisis. they're going home for thapnk giving. they're going to take a short break in december. yeah, we have to have a patch, but we have to have a fix. >> so does he have a point? is congress taking the fiscal cliff seriously enough? joining me right now, the man in charge at insurance broker
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willis group. joe is also on the fix the debt campaign. it's great to have you on the program. >> nice to see you again. >> thank you so much. we had this big rally in stocks on monday. on some rhetoric, i guess, that led investors to believe there was optimism we will get a deal done on this fiscal cliff. now they've left town. what do you think happens? >> i don't understand why there's not a sense of urgency. i agree with mario. i don't know that people appreciate the fact what cliff means. remember sundance kid, butch ka cassidy, when they jump over the cliff and they fell? the taxes are going to go up. interest rates are going to go up. nobody will be able to borrow any money. you can't buy a house. you're not going to be able to do anything that you want to do that you do today. as a result, that's what the cliff means. so if the government doesn't fix this issue and come together and get sane, then the bond markets are going to do it.
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what's a ten-year treasury now? 1.6 or something like that? it will go to 7%. buying a house will cost 10. it will cost 13 to do other things. you just won't be able to operate. >> you think this is going to be a market disruption, if, in fact, we go over the fiscal cliff? >> absolutely. i don't think people appreciate the fact when you say cliff they think it's a movie. this is what's going to happen automatically. the depending stopping is not thoughtful. taxes going up by 600 billions is not thoughtful. it's an unthoughtful thing brought about by laws in the past. >> which is why you joined this fix the debt campaign? >> absolutely. it's insane not to concentrate on this. i don't think most americans appreciate or understand what's going to happen on january 1. we spend $3.5 billion now, $120 billion in interest rates, $2.4 billion we take in. there's a $1.1 billion deficit.
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if that keeps up -- >> trillion. you're talking trillion-dollar deficits every year. >> if that keeps up, the spending goes to $6 billion. what we take in goes to $4.6 billion. you have a $1.4 billion deficit you're going to deal with in ten years with $1 trillion debt. interest payments you have to make every year. when you're making interest payments of $1 trillion a year, everybody is going to stop investing. germany isn't going to buy our bonds anymore. >> maybe they want this. it seems like both sides are digging in. the president says he wants $ .6 trillion in revenue. that means higher taxes as well as taking the loopholes away. maybe he wants to go over the cliff to prove a point. >> going over the cliff to prove a point is like wrecking your car to show that you can't drive. i mean, it doesn't make any sense. what makes sense is to be
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thoughtful. a democrats and a republican two years ago, simpson/bowles, got together and put together some guidelines that nobody paid any attention to. it had to do with health care. we spent twice as much on health care in this country as other countries do. we spend seven times the amount in defense than the top seven countries in the world, including china. the tax code needs to be revamped. the whole idea of social security. and they're going on vacation. we're talking about a huge, huge dent in the society that we live in today. i don't think people really appreciate the sense of urgency or understand what they do. >> i don't think -- it seems like washington doesn't. i think what mario said, linking it to hurricane sandy, if the governors went away during this crisis, we would all be upset. let me switch gears and ask you about hurricane sandy. big hit to the insurance industry. tell me what you're seeing. is there an impact on willis?
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how does the cost element play out? >> right after it happened, i said that i thought that the impact would be $30 billion to $50 billion of insurance capacity. everybody was at 5 to 15. now everyone is around 20 to 25. i think at the end of the day, it will be closer to 30. what's happening here is that the property gets hit first, but then as time goes on, what gets hit after that is business interruption. you find out later how much it hurt you with regard to the business that you're in. so as a result, they're going to see capacity of about $30 billion eaten up in the industry. i don't think that's enough, you know, to have a colossal hard market. i think it stops the market from getting soft, meaning rates going down, but i don't think that it's in a position where it's going to get real hard or you're going to have a hardening market. >> understood. meanwhile, this is one more major event you've seen at your tenure as ceo at willis.
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you've been there as ceo 12 years. stepping down this year. world trade center, 9/11, you saw the renames of the sears tower to the willis tower. amazing shareholder returns. >> it's been very good. i'm very happy. >> the shareholder returns are what? >> total shareholder returns are about 253%. >> 253%. but who's counting? congratulations, joe. >> thank you very much, maria. nice being here. i remember when i first got to willis. i was on your show. when we went public, you were on the floor with me. >> that's right. >> i remember it like it was yesterday. i've always appreciated the opportunities to see you. but i want to make sure people understand. call a congressman, call a senator, do something about this. this is a big deal. >> we will. joe, good to have you on the program. thank you so much. willis group holdings chairman and ceo. when the whale on wall street sneezes, will the art world catch a cold? we'll have the latest on s.a.t. capital steve cohen getting pulled deeper into an inside
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trading probe next and the effect on the art world. then, traveler beware. what you need to know to get over the river and through the woods to grandma's house. before hitting the brake, check out this. the giant balloons from macy's 86th annual thanksgiving day parade are being blown up here in new york city. more than 50 million viewers expected to watch the parade tomorrow morning. yeah, this is part of the traffic nightmare out there right now. stay with us. time to toast today's close with this. will the earliest thanksgiving in five years affect the number of shoppers looking to jump start their holiday shopping on black friday weekend? we'll tell you next.
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real-time paper trading to hone your skills, plus anytime you need it support. ♪ stocks, options, futures, and forex. get your trading on track. thinkorswim by td ameritrade. trade commission free for 60 days, plus get up to $600 when you open an account. to toast today's market close, we asked, how many americans will be shopping this thanksgiving weekend? 147 million. that's down a little more than 3% from last year according to the national retail federation. close to 79 million people plan to stay home this year avoiding the line. welcome back. s.a.c. capital founder steve cohen is in the cross hairs of federal regulators trying to tie him to an insider trading probe at one of his firm's subsidiaries. he may be a giant in the hedge fund world, but he's largely a mystery to the general public.
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wealth editor robert frank looks at his other passion, which is art collecting. we start with kate kelly. >> maria, long before steve cohen was associated with the government's insider trading investigation, he was known for making a killing trading the markets. his generated annual average returns of 30% since inception and 20% in the last decade. that performance is in part largely to fantastic years in the 1990s but also more solid ones recently. in 2008, they fell 19% in line with the average, which is to say lousy hedge fund performance last year. this year they're up more than 10%, again, beating the averages. the firm manages about $14 billion, two-thirds of which belongs to cohen and colleagues
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and employs about 1,000 people. but insider trading allegations have thrust cohen into the the limelight. in complaints filed yesterday, the department of justice and the sec paint a picture in which steve cohen was closely involved in a decision to sell two major pharmaceutical positions in 2008. a decision that allegedly was based on inside information gathered by a former sec trader named mathew martoma. it's not clear if cohen news about the inside news and he says his behavior was appropriate. although s.a.c.'s redemption deadline for the end of this year has already passed, at least for one investor i know, the decision was to redeem capital yesterday in the wake of new legal revelations based on concerns from his own clients about the ongoing issues facing s.a.c. right now. >> really interesting stuff. of course, investing not the only passion in cohen's life. he's also one of the world's top art traders.
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wealth editor robert frank has that angle. >> thanks. steve cohen is often listed as one of the top five art collectors in the world. he's purchased more than $700 million worth of art, much of that just in the past decade. some of his biggest trophies include one for $137 million. he owns the famous "turquoise marilyn" by andy warhol. and of course, the famous "pickled shark." the shark started to decompose, so in 2006, cohen paid to have a new shark put in the tank and the piece was restored. there's talk among art dealers that cohen has become more of a seller than a buyer recently, and not all of those sales have gone that well. he tried to sell a painting last week at the christy's auction, but it was one of the few pieces that failed to sell. it didn't meet the estimate of
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more than $8 million. one reason cohen has so much art, he has a lot of wall space. his stone mansion in connecticut is over 35,000 square feet. the estate has its own putting greens, a hockey rink, and zamboni house. he's also quite fall an tlopphi. whatever happens, cohen is still a very popular figure among art dealers, charities, and museums. you know they're going to be watching all of this very closely. >> has it impacted the art world already, or are we anticipating? >> we're kind of anticipating. look, you know, this is a small part of cohen's total wealth. he's worth a reported $8 billion. he hasn't cornered a single artist. if he has to even liquidate, it's not going to lower the prices in the market. in fact, it may, you know, create some much-needed supply. but he is such an important
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benefactor for museums and such an important buyer that could be a big deal for a lot of people. >> sure. ripple effects. thanks so much, robert frank, kate kelly. up next, brace yourselves if you're one of the mms of americans hitting the roads, rails, or airlines this weekend. may be in for a bit of travel trouble ahead. we'll tell you where the hot spots are. that's next. u trade. so we have ongoing webinars and interactive learning, plus, in-branch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. [ rodger ] at scottrade, seven dollar trades are just the start. our teams have the information you want when you need it. it's another reason more investors are saying... [ ] i'm with scottrade.
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is officially on as millions of americans are hitting the skies, roads and rails. we are going to get back to phil in a moment. we are having technical difficulties. we are expecting the roads to be very crowded with lots of traffic already we are hearing reports that certainly in new york city ewe do, in fact have traffic piling up. we will take a short break and come back with the details on the travel for the weekend. e up. that's right. i've learned the only way to get a holiday deal is to camp out. you know we've been open all night. is this a trick to get my spot? [ male announcer ] break from the holiday stress. save on ground shipping at fedex office.
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[ female announcer ] today, it's not just about who lives in the white house, it's about who lives in the yellow house, the green, and the apartment house, too. today we not only honor the oval office, but we honor the cubicle, and the home office as well. because today it's about all of us. and no matter who you are, you're the commander-in-chief of your own life. ♪ you can stay in and share something... or you can get out there and actually share something. ♪ the lexus december to remember sales event is on. this is the pursuit of perfon.
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introducing the business smart inkjet all-in-one series from brother. easy to use. it's the ultimate combination of speed, small size, and low-cost printing. welcome back. more on the travel for the weekend. >> it has been a very quiet and smooth start to the thanksgiving travel weekend. let's look around the country starting in boston. you see the roads. a lot of cars heading out of town. 43.6 million people traveling this thanksgiving weekend. that is a slight increase from
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last year. more people driving 50 miles since 2007. the national average for gasoline at $3.41. look at this image here. it is a little hard to tell but behind all of those plains that's the united states. and right now 5,000 flights are in the air according to the flights. the airlines are counting on a quiet thanksgiving to fuel fourth quarter profits. average domestic air fare at $180. fewest number of people flying however since 2009. when you have fewer seats which is what we have because capacity has been stripped out you have higher air fare rrs. you have seen air fares are up 16%. a as a lot of people talk about being thankful on thanksgiving. let's look at one airline stock you wanted to own. u.s. airways up 192%. not entirely because of the business but more because of the
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speculation. >> thanks so much. >> the latest on your travel for the weekend. and finally my observation on the warning bernanke issued to america yesterday. our economy might want to give thanks to the fed when congress shirked its responsibilities. i was happy to be at the new york economic club lunch where bernanke spoke. he reaffirmed that the recovery continued to grow at a slow pace and that the unemployment story remains high and says housing has been improving. we saw zillow saying october saw the largest monthly gain for home prices in more than seven years but the real fireworks happened when a question came up about the fiscal cliff. >> in the worst case scenario where the economy goes off the broad fiscal cliff i don't think
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the fed has the tools to offset that. >> and those words sent the markets lower yesterday and probably helped to contribute to tempt today. my take is the chairman is worried. for years he has been one of the only adults in the room. we know that but now he knows the nonadults are on the verge of creating a disaster that even the fed and the weapons can't counter act. bernanke knows how the economy is. falling off the cliff will send the economy back into the kind of recession a country does not quickly recover from. if you heard what the chairman was saying even without going over the fiscal cliff he is not expecting vibrancy. he is telling congress it is time to do your jobs. the fed has risked the value of our currency with massive money printing to compensate for
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washington's dysfunction. mr. bernanke made it clear congress and the president own this fiscal cliff. it is on them to overt the crisis. take a look at the day on wall street. the dow jones finished up. and the s&p 500 up 30 and a quarter points on the session. volume very light. markets closed tomorrow. half a day on friday. thank you for being with us for all of us here at the closi"clo bell." >> follow us on twitter. . it's almost thanksgiving and in the world and wall street we have lots to be thankfu